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Larry Ellison, CEO of Oracle, kicked off his company's OpenWorld conference Sunday with a history lesson on the cloud.

Ellison detailed where the cloud started with Software-as-a-Service (SaaS) vendors like Salesforce.com, and then painted a vision for where it is headed at his own company. Oracle is now moving from being just a SaaS player to delivering a full Cloud Infrastructure-as-a-Service (IaaS) offering. The Oracle IaaS includes both public and private editions and is powered by a new Oracle cloud database and a new Oracle Exadata X3 database machine.

Oracle's decision to enter the IaaS cloud market is not a major surprise. Ellison hinted at the announcement during his company's earnings call last week.

"The infrastructure that we're offering isn't conventional infrastructure," Ellison said during his Sunday night keynote.

Ellison explained that the Oracle Cloud uses Oracle's operating systems, virtualization, compute and storage technologies running on Exa-class engineered systems. He added that the service will be available in both public and private cloud editions.

The Oracle private cloud is an extension to Oracle's cloud that runs behind a enterprise's firewall. Ellison noted that in true cloud fashion, Oracle owns the hardware, and manages and updates the software. Enterprises just pay a monthly fee based on what they actually use.

Oracle Database 12c

A core pillar of Oracle's cloud offering is its own database that will help to power the service. Ellison announced the new Oracle Database 12c during his keynote and referred to it as the first multi-tenant database in the world. He noted that to date, cloud application vendors have rolled multi-tenancy into their own applications. In Ellison's view that's not the right approach as it doesn't provide for full operational efficiency and database operations.

The Oracle Database 12c, in contrast, is a container database that is able to contain a number of separate pluggable databases that all leverage the same underlying operating system and memory. Ellison explained that instead of the cloud applications delivering multi-tenancy, it is the database management system that is responsible for keeping databases separate and secure.

According to Ellison, the Oracle Database 12c approach to multi-tenancy delivers a database that is six times more scalable than the previous Oracle Database.

"Oracle 12c is the software foundation for the Oracle cloud with multi-tenancy built at the right level," Ellison said.

Exadata X3

The hardware foundation for the Oracle cloud is set to be the new Exadata X3 engineered system.

"If you thought the old Exadata's were fast, you ain't seen nothing yet," Ellison said.

According to Ellison, the new Exadata is able to store entire databases in memory with its included 26 TB of memory. Not all of the memory is traditional DRAM modules either.

Ellison explained that the Exadata X3 has 4 TB of traditional DRAM and 22 TB of Flash. He argued that the Flash memory was not a solid state disk drive, but is in fact another form of semi-conductor silicon-based memory.

"This is not like solid state disk, this is flash as part of a memory hierarchy," Ellison said. "DRAM is at the top of the hierarchy with 4 TB, then 22 TB of Flash cache that is not semi-conductor disk, and then there is lots and lots of disk storage below that."

Ellison added that the flash cache will keep all active data in memory, which is something that a flash disk cannot do.

"Flash disk does not adapt with every write I/O," Ellison said. "Flash cache does and it really is a memory hierarchy."

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of the IT Business Edge Network, the network for technology professionals Follow him on Twitter @TechJournalist.